January 1, 2001
When Robert Snyder, president of ORC Plastics, headed to Monterrey, Mexico to visit one of the company's major customers, he assumed he'd simply be exploring the possibility of setting up shop in Mexico to support that one customer. Instead, he found five additional current customers in the vicinity that were also interested in having ORC become a local supplier. This was no coincidence, according to Robert McClane, president of McClane International, a business development firm retained by ORC. This south-of-the-border spot is becoming a major manufacturing mecca for OEMs in the U.S., he explains.
ORC Plastics (formerly Oneida-Rostone Corp.) specializes in thermoplastic custom molding for several markets' business machines, telecommunications, automotive, and lawn and garden. Its thermoset division, Rostone Corp., molds parts as a Tier Two supplier to Budd, and has also landed a Tier One job with one of the Big Three for a 2002 car model.
The trend among major U.S. OEMs to build plants in Mexico is driving molders to the region.
After Snyder's visit, ORC announced that this year it would open a facility in Monterrey for both thermoplastic and thermoset molding. Initial production will be for a nonautomotive market segment, but ORC may add Tier Two automotive capabilities. Another future possibility: recreating the materials compounding operations from its Rostone, IN facility. Originally scheduled to open in February, the facility is now planned for 4Q 2001.
Snyder tells IMM that the driver for molders to build plants in Monterrey revolves around a trend among major U.S. OEMs to build manufacturing and assembly plants in the region. "OEMs have built huge plants in and around this area, and would like to have a local supply of molded parts to eliminate shipping," he says. "There is more opportunity among our existing customers in Mexico than in Europe. Along with lower labor costs, OEMs in Monterrey are able to export to emerging markets in South America, which are booming."
It appears the auto market is leading the charge. Snyder notes that there are assembly plants for Volkswagen, DaimlerChrysler, GM, Ford, Nissan, and other automotive manufacturers near Monterrey. According to McClane, Tier One, Two, and Three suppliers often follow automotive OEMs that establish a base. "OEMs bankroll their suppliers in many cases because the volumes are too high for existing suppliers to fund," he adds. "But the cost of U.S. capital is far less than that in Mexico, which gives U.S. transplants an advantage."
The fact that Mexico's maquiladora program is scheduled to conclude by the end of 2001 is another growth incentive. According to McClane, this will increase U.S. manufacturers' opportunities to supply the market because products coming from outside North America will be subject to duty fees.
Data from SECOFI, the Mexican commerce department, confirm that there are 182 U.S. automotive parts firms currently operating in Nuevo León, the state in which Monterrey is located. Electronics OEMs are also heading to the area. Within the last five years, 26 of these companies, including SCI, Celestica, and Solectron, have established operations in Nuevo León, investing a total of $339 million.
Phone: (877) 945-0142
Fax: (704) 945-0144
E-mail: [email protected]McClane International
San Antonio, TX
Phone: (210) 220-5454
Fax: (210) 220-5252
E-mail: [email protected]
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